Category Archives: Hurricane Sandy

The recently enacted city budget for 2014 includes about $250 million in new capital spending for some of the projects outlined in Mayor Michael Bloomberg’s 400-plus page report A Stronger, More Resilient City last month. Consider the funding a small down payment on what promises to be very costly projects to prepare the city to deal with the effects of climate change.

In his speech last month introducing the report, the Mayor estimated that the cost “of everything we’re proposing” is $19.5 billion. This total cost, projected over 10 years in inflation-adjusted 2013 dollars, includes two main components. One component is the long-term resiliency projects that are the focus of the report. Those total $14 billion. The other $5.5 billion component is spending on recovery from Sandy, which the report describes as related to the city’s longer-term resiliency efforts. But the combined $19.5 billion estimate is surely low, and not just because construction and other capital projects tend to have escalating price tags.

To start with, for each of the 250 projects expected to cost $1 million or more—and that includes the vast majority of them—the estimated cost is presented in ranges such as $1 million-$10 million, or $150 million-$175 million, with the highest $1.1 billion-$1.4 billion. The $14 billion estimated cost of the long-term resiliency projects is based on totaling the lower bound of each proposal’s cost range. Total the projects up based on the higher end and the expected cost of the long-term resiliency projects climbs to $16.8 billion.

Then there’s the fact that for a number of projects the estimated cost only reflects the expected price of a planning study—not the cost of the actual construction project that would result from the study’s findings. For example, for a study of how to minimize drainage pipe flooding has a cost range of $10 million-$20 million. It’s reasonable to assume that for at least some of these projects implementing the study’s findings will cost more than the study itself. The Mayor’s proposal for Seaport City, a new community that would be built on landfill on the east side of the Lower Manhattan waterfront, is also presented just in terms of a study cost.

Nor do the anticipated expenditures presented in the report always reflect the full project cost. The plan to “complete repairs and resiliency retrofits” of public housing damaged by Sandy is accompanied by an estimated cost of $700 million-$750 million. That cost, though, covers only 40 percent of affected buildings. So the repair and resiliency work for the other 60 percent of the buildings will still need to be done, but at some as of yet undetermined—but probably quite substantial—cost.

The cost of all the initiatives outlined in the report is expected to be funded through the city’s capital budget. About $10 billion in funds for the 250 proposals have already been identified, including $5.5 billion in city capital budget allocations for projects already underway and that are now being cited as part of the city’s resiliency efforts. The Bloomberg Administration also counts $4.5 billion in federal funds towards the $10 billion in identified resources. Some of the federal dollars have already been allocated, some not.

The rest of the funding remains uncertain, although the Bloomberg Administration anticipates some $4 billion in additional federal aid will be available and that $1 billion in projects to shore up the city’s electric and gas utilities will be covered by passing the costs on to ratepayers. That still leaves a $4.5 billion hole—and that’s assuming that the cost for these projects don’t rise above the Mayor’s estimate.

Then there’s a whole other category of expenditures that will also be needed for many of the resiliency initiatives. As Director of Resiliency Daniel Zarrilli and his colleagues Gwendolyn Litvak and Daynan Crull noted in a phone conversation, no funds for operating or maintaining any of the projects have as yet been included in the in the city’s financial plan for upcoming years. So while there may be money to install integrated flood protection systems or build new docks for expanded ferry service, there’s no money set aside to operate and maintain them. Tallying up the potential maintenance and operation costs remains on a “to do” list.

And there’s another big-ticket item to consider: the Metropolitan Transportation Authority. Proposals for safeguarding the city’s transit system are not addressed in the Mayor’s plan because those are not expected to be city budget expenditures. But it’s an expense that will likely be borne, at least in part, by city residents.

Protecting the city from rising tides, storm surges, and other effects of climate change is critical. It will also be expensive. While a great deal has been said recently about the near-term costs of settling the expired contracts with the city’s municipal labor force, it could be the longer-term costs of resiliency that swamp the city’s budget.

Long before Sandy slammed the city’s coastline, the Bloomberg Administration had been sounding alarms about coming threats to the city due to climate change. In well-known reports such as PlaNYC and through less publicized efforts such as the convening of scientists and risk management experts for the New York City Panel on Climate Change, the Bloomberg Administration signaled that it clearly recognized the significant impact global warming and rising sea levels could have on New York.

The Mayor’s March 2011 report Vision 2020: New York City Comprehensive Waterfront Plan forecast the coming of storms like Sandy and the potential affects: “The rise in sea level and increased frequency and magnitude of coastal storms will likely cause more frequent coastal flooding and inundation of coastal wetlands as well as erosion of beaches, dunes, and bluffs.” A few weeks later, in an update to PlaNYC, the warnings were reinforced: “As a city with 520 miles of coastline—the most of any city in America—the potential for more frequent and intense coastal storms with increased impacts due to a rise in sea level is a serious threat to New York City.”

Yet even as City Hall grappled with these concerns it continued to put substantial resources into major development projects on the waterfront, rezoning sites as manufacturing declined— including some in prime areas for flooding, the so-called Zone A evacuation areas. Just one month before Sandy struck the city, Mayor Bloomberg announced a plan by private developers to build a $500 million complex on city-owned land on Staten Island’s North Shore that would include the world’s largest Ferris wheel as well as a hotel and outlet mall. Part of the site sits in a floodplain.

An even larger development project is planned on the Coney Island waterfront, one of the neighborhoods hardest hit by Sandy. The city has rezoned the area to allow the development of hotels, housing, and a new amusement park, and has allocated more than $400 million for sewer upgrades, land acquisition, lighting, boardwalk and park improvements, and other projects to foster the redevelopment plan. On the Queens waterfront, the city is investing $147 million in the Hunters Point South project, which also sits in Zone A. Already under construction, Hunters Point South includes 5,000 apartments, a 1,100-seat school, and retail space.

To be fair, the Bloomberg Administration has taken steps to protect the city from the affects of rising sea levels and storm surges, following existing city building codes and Federal Emergency Management Agency guidelines. But these guidelines may not be adequate in the face of storms with the fury of Sandy.

As Yale University’s Environment 360 Web site noted, “The storm easily overwhelmed many of the relatively minor adaptations that New York had already put in place.” For example, Brooklyn Bridge Park, where another large development project is planned, was created with what are called “soft edges.” These are supposed to help reduce the force of waves and accommodate rising tidal levels. While these edges may work in many instances, they were no match for Sandy, which swamped the park and sent water lapping at the structure housing the newly installed carousel.

In Sandy’s wake, Governor Andrew Cuomo, Mayor Bloomberg, and Council Speaker Christine Quinn are promising to ramp up efforts to protect the city and the city’s infrastructure from what many believe is the increasing threat posed by major storms. Speaking to a group of business and civic leaders, Council Speaker Quinn said, “We…must rethink the way we build in neighborhoods that were destroyed by the storm.”

Such rethinking takes time for evaluation and planning, time that some city officials and developers seem disinclined to take. Just last week, as many Staten Island residents and business owners continued to clear the rubble from Sandy—and mourned the loss of family and friends—the city’s Economic Development Corporation held a hearing to advance the Ferris wheel project on the North Shore.

The city can press ahead with waterfront projects like the one on Staten Island’s North Shore, as well as others throughout the five boroughs, before there is a clearer plan for the kinds of steps New York will take to minimize the danger from future Sandys. But doing so increases the risk that the next “superstorm” will exact an even higher price tag.

In the decade since the terrorist attacks on 9/11, New York City has faced several other disasters that drew federal aid, such as last year’s Tropical Storm Irene and the blizzard and tornadoes of 2010. As IBO’s George Sweeting points out, the city received federal aid for a far wider range of uses in the aftermath of 9/11 than it did following the weather-related events.

While Hurricane Sandy shares the climatic origins of Irene, the blizzard, and tornadoes, the extent of the physical devastation is more akin to 9/11. The number of lives lost due to Sandy, while tragic, paled in comparison to the World Trade Center attacks. But the widespread devastation in the wake of Sandy —from large swaths of Staten Island to the Rockaways to Coney Island, and once again, Lower Manhattan—has a price tag that puts it in a league with 9/11. Moody’s Analytics has estimated a cost of $12 billion for the New York City area.

[UPDATE: Gov. Andrew Cuomo estimated today that losses due to Hurricane Sandy could total $33 billion in New York State.]

The question for the coming days and weeks for New York City and other hard-hit areas is: Will federal disaster relief have the more limited scope of the typical response after a serious storm or will Washington respond with much broader types of aid as it did following 9/11?

Federal aid in the wake of storms usually has one fundamental component: emergency response and recovery. This immediate assistance may include rescue effort; emergency food and shelter; low-interest loans to residents and small businesses; unemployment payments; the cleanup of debris; and repair of damaged infrastructure such as roads, buildings, equipment, parks, and utilities. The $20.5 billion in aid provided after the attacks on the World Trade Center featured two other significant components: assistance for additional rebuilding and development and substantial budget relief for the city to make up for expectations of lost tax revenues.

The aid for rebuilding and development after 9/11 was substantial, totaling $11.3 billion in direct assistance and tax breaks. A large portion of this was dedicated to transportation projects such as the approximately $4 billion World Trade Center Transportation Hub and $530 million for the now Sandy-flooded South Ferry subway station. For a more detailed look at World Trade Center-related aid, see this IBO report. Washington also authorized lower-cost financing for development projects through the creation of tax-exempt Liberty Bonds estimated to cost the federal government $1.2 billion in foregone tax revenue. The use of these bonds became controversial as some were directed towards projects such as the new Goldman Sachs office downtown as well as the Bank of America building in midtown and the Bank of New York tower in Brooklyn. Good Jobs New York, a nonprofit that monitors local economic development deals, has already raised concerns about how decisions will be made if wide-ranging rebuilding aid comes the city’s way as part of Sandy relief.

Post-9/11 assistance also included nearly $2 billion in budget aid mostly for the city (a portion of this amount was for the state). About half of this aid came through a provision that allowed the city to refinance some of its tax-exempt bonds and as a result reduce its spending on debt service. The other half materialized when expenditures for the initial emergency response and cleanup turned out not to cost as much as expected; the city just got to keep the money.

Federal aid following the September 2010 tornadoes was typical of the sorts of aid that follow natural disasters. The cost of cleaning up and repairing the damage from the storm was $21.2 million. The Federal Emergency Management Agency provided $10.8 million, the state $1.8 million. The rest was on the city’s dime. That was also the year of the blizzard that paralyzed the city in the days after Christmas. Washington only provided some disaster aid to cover costs in Staten Island. Coupled with the costs of several other big storms, the city spent more than $100 million that fiscal year on snow removal and related road repairs, the vast majority at our expense. For more details on weather-related costs in fiscal year 2011, see this report, pg 49. Damage from last year’s Tropical Storm Irene cost the city about $55 million, with 90 percent of the expenses eligible for federal reimbursement.

With the dust still settling from Tuesday’s election, it remains to be seen how extensive federal aid for Sandy will be. A $12 billion proposal to supplement federal disaster cleanup and recovery funds has been introduced in the House, but the Senate appears to be waiting for updated estimates on the extent of the damage before it acts. Neither the House nor the Senate seems to be discussing the kind of broader aid that followed 9/11.